Giving foreign exchange to enterprises or ordinary people is flawed, because foreign exchange will eventually return to commercial banks. This is because foreign exchange cannot be spent at home. For example, the commercial bank gave Fund A $20 million, but because the foreign currency was not circulating in China, Fund A had to go to the commercial bank to convert it into RMB 6,543.8+36 million (assuming the exchange rate was 654.38+0: 6.8), so Fund A finally got RMB 6,543.8+36 million instead of $20 million. And the $20 million issued by commercial banks has returned to their own hands. However, in order to get back the $20 million, commercial banks must spend an extra 654.38+36 billion RMB to fund A (if banks are short of money, they must print new ones). Therefore, sending foreign exchange to Fund A is equivalent to sending equivalent RMB to Fund A or printing equivalent RMB to the other party. So that's why foreign exchange reserves can't be used to support poor areas in China, nor can they be used to support national construction. Using foreign exchange reserve funds to solve a series of problems is like using RMB to solve problems, either in cash or printed in RMB. But it also bypassed a big bend.

The same is true for any enterprise or individual to issue foreign exchange.

The correct way is that if an enterprise or individual needs foreign currency for foreign trade (that is, it is not used in the domestic market), it needs to go abroad or remit it to foreign shippers to buy goods, and it needs to convert RMB into US dollars in the bank and then use it for foreign economic activities. In addition, the central bank cannot directly use foreign exchange reserves to buy goods in the international market. Because China's foreign exchange reserves are not the financial funds of the central bank, but the liabilities of the central bank. Generally speaking, these foreign exchange funds are bought by the central bank by issuing the basic RMB, and it is entirely possible for the other party to buy back. Therefore, these foreign exchange reserves cannot be spent by the central bank if it wants. Instead, the foreign exchange in foreign exchange reserves is repurchased by the owners and representatives of enterprises and other entities in China, or individuals through commercial banks and central banks, and then foreign assets such as foreign resources, mines and oil fields are purchased. One way is that the state can set up a transit entity such as an investment enterprise, issue RMB bonds through this entity, and then purchase foreign exchange from the central bank through commercial banks after this entity raises RMB funds, so as to achieve the purpose of using the funds in foreign exchange reserves for economic activities.

But why can the central bank use foreign exchange reserves to buy foreign American bonds? This can be regarded as an economic activity that the central bank requires to preserve value. Strictly speaking, it is risky, but it should not be. However, if the central bank's foreign exchange reserves are too large, it will definitely depreciate with the passage of time, just like a person put 1 0,000 dollars in a box 50 years ago, and the money will depreciate 50 years later. Therefore, the central bank uses most or part of its funds to buy foreign bonds for the sake of maintaining value. Because foreign debt bears interest. Much better than the depreciation of the central bank for a period of time. This is a special case, and it is also considered as the only central bank exercising the right to invest abroad (if it can be regarded as investment). Generally, it can only be backed by huge amounts of self-owned foreign exchange funds. If you think it is more appropriate to buy foreign entities, the resources are more appropriate. When foreign exchange reserves are excessive, the RMB assets of enterprises will increase due to the appreciation of RMB, so that more foreign exchange can be purchased with less RMB than before to increase the purchasing power of overseas entity assets. To achieve the purpose of not buying or buying less foreign bonds, but buying most foreign exchange funds through enterprises buying foreign entity assets and resources.

Some economists are also prone to make mistakes in this regard. For example, on the one hand, they advocate using more foreign exchange funds to buy foreign resources and foreign entities. It also opposes the appreciation of RMB, which makes it impossible for enterprises to obtain more foreign exchange at a low exchange rate with limited RMB funds, engage in economic expansion and buy foreign physical assets and resources. So this is a contradiction. Just like if the RMB appreciates by 20%, you can exchange the same amount of RMB in the bank for 20% more foreign exchange than before the appreciation. Used to buy foreign goods, real economy, resources and so on.